Why do price-sensitive buyers tend to harm cooperative pricing in a market?
A)They cause an increase in detection lags because competitor prices become more difficult to monitor
B)There is a resultant decrease in the frequency of interaction between competitors
C)There is an increase in the probability of misreads
D)The is an increase in temptation to cut price,even if competitors are expected to match
E)There is an increase in detection lags because prices of competitors are more difficult to monitor

Question

Quizplus · Accepted Answer

Price-sensitive buyers are more likely to switch to a competitor offering a lower price, which puts pressure on firms to cut prices even if they may not want to. This can lead to undercutting and a breakdown of cooperative pricing agreements.

Why Do Price-Sensitive Buyers Tend to Harm Cooperative Pricing in a Market